Casey Alexander: Probably clear — more clear to me than most probably. But I actually think it’s a very good answer. So that was very helpful. Lastly. on
Art Penn: Okay.
Casey Alexander: Walker Edison you marked that similar to where you actually have a partner in that loan that also marked. And Walker Edison has been a company that has given PennantPark substantial benefits in the past. Do you want to kind of go through the history of that where you stand with that loan today what you think is going to happen? And there’s also another big private equity shop that is actually behind you on that that might be helping you drive a positive outcome there? So I would love to hear your thoughts on that one.
Art Penn: Yeah. So Walker Edison was a company that we financed, we say five, six years ago. It’s a company that is in the furniture business and their distribution channel is Wayfair, Amazon. It’s an e-commerce distribution channel. We get a loan to the company. We took an equity co-invest five, six years ago. It did very, very, very well. COVID accelerated things. I think our equity co-investment we had a four times MOIC in cash. To-date, about a year, 1.5 years ago, a division of a large private equity sponsor Blackstone put $250 million of junior capital into the company. We rolled into a new debt piece with other partners in the direct lending industry. And we felt it was a safe loan, obviously at that point €“ in that point in time.
Otherwise, we would have done it kind of enhanced by the equity cushion by the large private equity sponsor. Companies massively underperformed since then. The post-COVID world is different and this company in and of their own right did not manage that well. So they did pay us cash interest as of 9/30. So we’ve leave the 9/30 quarter kept it on hold. Obviously, all bets are off for the 12/31 quarter and we’ll see what happens between now and then. There are restructuring conversations going on as we speak. And I think that’s probably all I can report at this point in time.
Casey Alexander: Great. Thank you very much for that answer and that’s all my questions. I appreciate. Thanks, Art.
Art Penn: Thanks, Casey.
Operator: We’ll take our next question from Paul Johnson with KBW. Please go ahead.
Paul Johnson: Hey, good afternoon, guys. Thanks for taking my questions. First one, I just was hoping to understand the mark on RAM Energy a little bit more this quarter and kind of what drove that markdown? I understand you guys have taken a very patient approach to turnarounds in the past. And there’s a lot of moving pieces that potentially go into the valuation here as you guys are evaluating strategic alternatives. But one of the things I look at €“ I mean I’m looking just in the public market comps for E&P companies, the XOP, up 6.5% in the quarter. I know oil prices were down in the quarter about 25% or So. RAM Energy I think this quarter you guys marked about 32% lower but a lot of the public comps for energy companies specifically the E&P sector is obviously up.
So I’m wondering is it anything that’s going on fundamentally with the operations of the company that would cause you guys to mark the investment down, or is it related to the strategic alternative exploration process, where potentially maybe you’ve seen lower offers than the valuation in 2Q? But anything that you can say would be helpful.
Art Penn: Thanks Paul. And we do have to be very careful as the company is exploring strategic options, so somewhat limited in really answering the question Paul, other than to say many factors go into valuation. The price of oil and gas between June 30 and September 30 was down quite substantially and that was one of the factors that went into the valuation.
